“I have a contract with a kung fu establishment that I do not feel I should be bound by. It states: “I authorize (name of business) to keep my signature on file and to charge my credit card, on an ongoing basis, for amounts I owe. I understand that this agreement is valid for one year from the below date. I also agree to contact the merchant if there are any changes to my credit card account information.” It than states my name, address, card number and the date, and is signed by me. Nothing more is stipulated.
It is the merchants position that I should pay them 125.00 a month, even though I no longer use their service. I do not feel that I owe them anything because I’m not going there anymore. It is my position that the agreement just authorizes them to charge my credit card w/o me having to sign a receipt everytime. In your opinion, do I have any ground to stand on if they sue me? The merchant has indicated they may sue for payment of future months, even though I do not plan to go there anymore.
I also believe I am due a refund. I advised the establishment not to bill my card for August (since I didn’t use their service at all in august.) and they did so anyway. I have since cancelled the credit card and notified them of this. My request for a refund has been refused. In you opinion, do I have any ground to sue in small claims court for the $125.00 charge?”
If that is the entirety of the contract, there’s a good chance that a court wouldn’t uphold it because it doesn’t appear to have the necessary elements to make an enforceable contract. Rather, it appears to be nothing more than an authorization to process your charges using a signature on file, much like the kind of authorization that credit card processors require merchants to have if the customer isn’t present at the time of the transaction to sign the receipt.
Generally speaking, to be a valid contract, you need to have several key elements, including a description of the product/service being provided, the amount being paid, and something indicating acceptance (such as a signature). If that is the entire extent of your agreements with the business, it may not constitute a valid contract. Indeed, in some states such a contract that purports to last a year and incurs recurring charges must have certain written disclosures or else they’re not valid.
That’s not to say that a court wouldn’t hold you responsible for entering a verbal agreement with that business. Oral contracts are often enforceable and just because you don’t have it in writing doesn’t get you off the hook. But it may be an uphill fight, especially for a business that should know better than to rely on an oral contract in this kind of situation.
Your best bet is to consult an attorney in your area about the enforceability of such agreements, and can help you craft a letter informing them that you do not intend to use their services any longer and that you are revoking the authorization for future charges. They could still sue, but it may not be profitable for them to do so if the laws of your state work against them.
Contact your local or state bar association and see if they have an attorney referral service. Often times you can get a one-hour consultation with an attorney at a discounted cost (sometimes as little as $50) if you work through the bar association’s referral service.